Applying the Alternative Response Hierarchy Models to Predict E-Commerce Success in Southeast Asia
The strong economic growth in Southeast Asia has led
to a continuous improvement in Internet infrastructure making it the next
hotspot for e-commerce ventures. The abundance of young, tech-savvy consumers
is an appealing aspect of the Southeast Asian market. Roughly half of the
region’s 600 million people are under 30 and increasingly moving to cities,
which helps explain why the region has some of the highest levels of digital
engagement in the world. And high Facebook and Twitter usage provides
e-commerce companies with a fertile channel for connecting with potential
customers.
However, the rapid increase in digital engagement
did not produce a relative growth in Internet shopping. The total e-commerce
transactions the past decade is still relatively small compared to more
advanced economies. The level of trust in using the Internet for shopping is
still weak because Southeast Asian consumers have yet to develop the maturity
in buying products or services online. Comparing advanced economies to
Southeast Asia, trust in Internet shopping is high. The high trust index is
driven by four antecedents of which can be used to predict future buying
behavior in Southeast Asian markets.
Lee and Turban (2001) proposed a theoretical model
for investigating the four main antecedent influences on consumer trust in
Internet shopping, a major form of business-to-consumer e-commerce:
trustworthiness of the Internet merchant, trustworthiness of the Internet as a
shopping medium, infrastructural (contextual) factors (e.g. security,
third-party certification), and other factors (e.g. company size, demographic
variables).
They suggested that the antecedent variables are
moderated by the individual consumer’s degree of trust propensity, which
reflects personality traits, culture, and experience. Based on the research
model, a comprehensive set of hypotheses is formulated and a methodology for
testing them is outlined.
Some of the hypotheses are tested empirically to
demonstrate the applicability of the theoretical model. The findings indicate
that merchant integrity is a major positive determinant of consumer trust in
Internet shopping, and that its effect is moderated by the individual
consumer’s trust propensity.
As seen in recent studies, Southeast Asia is the
next big market for Internet shopping platforms. The slow but increasing growth
of e-commerce transactions in the past is an indicator of adoption and
increasing consumer trust. However, as more online stores opens, consumers are
presented with several websites that are similar in nature but provides
different experiences from discovery to purchasing an offer. This experience is
a predictor for future online transactions – whether to continue buying online
or abandon Internet shopping and revert to the physical retail stores.
In most studies, experience in the online context is
synonymous to the entire digital sales funnel. It is the entire user experience
from discovering the offer through online ads, increasing their knowledge by
familiarizing themselves with the website, until the consumer reaches the end
of the sales cycle and decides to buy the offer. Most marketers also use this
linear formula to improve their digital marketing campaigns and expect
incremental sales growth by replicating the offline retail experience in an
online setting. What most marketers forget is that online buying behavior does
not follow the traditional consumer response processes.
Product tangibility is what’s lacking in the
Internet shopping process hence forces the consumer to respond to the
experience differently compared to the traditional retail experience. And if
the consumer behaves differently, a different approach is needed to further
investigate what are the key drivers for buying online.
Michael Ray (1974) has developed a model of
information processing that identifies three alternative orderings of the three
stages on perceived product differentiation and product involvement. These
alternative response hierarchies are the standard learning, low-involvement,
and dissonance/attribution models (Figure 1)
Figure 1
Ray’s study show that not all consumers follow the
same purchase patterns and their response process varies based on their level
of involvement. A change in consumer attitude, in this case the act of
purchasing an item, changes depending on what type of product or services is
being bought and under what circumstances. Adding the Internet as a medium
complicates this process and highly influences the consumer attitude. Ergo,
applying the alternative response process in understanding Internet shopping
can easily predict e-commerce success. E-commerce succes is defined as total
sales revenue and repeat spending on the online store.
The DeLone and McLean IS (Information System)
Success Model is an existing success-measurement framework that has found wide
application since its publication in 1992. It is a comprehensive framework for
measuring the performance of information systems. With the emergence of new
business models and e-commerce platforms, an updated version of the model can
be applied to e-commerce success measurement (Figure 2).
Figure 2
The new and updated model is based on the empirical
and theoretical contributions of researchers who have tested and discussed the
original model. They suggested that the updated model is composed of six
dimensions - System Quality, Information Quality, Service Quality, Use, User
Satisfaction, and Net Benefits. Based on these independent researchers, they
stressed the importance of measuring the possible interactions among the
success dimensions in order to isolate the effects of independent variables on
one or more of them.
Viewing the DeLone & McLean IS Success Model
from both a process perspective and a variance perspective can be useful in
identifying and understanding these interactions. Drawing from the information
system and marketing literature over recent years, the six dimensions of the
updated DeLone and McLean model comprise a parsimonious framework for
organizing the various e-commerce success metrics identified in the literature.
Applying the alternative response hierarchies to
predict e-commerce success will give insights to the key drivers for a
successful online business. Understanding how a consumer develop their attitude
towards Internet shopping in Southeast Asia will provide future researchers
insights into how to tap this growing economy.
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